Mortenson replaces Skanska Hunt as general contractor for KeyArena renovation now topping $800 million

Originally published December 11, 2018 at 10:57 am
Updated December 11, 2018 at 12:37 pm

An aerial view of KeyArena. (Seattle Times file photo)

Mortenson has been named the new general contractor for a KeyArena renovation project now pushing beyond $800 million in cost. In replacing Skanska Hunt as contractor, the Oak View Group development team also added renowned architectural firm Rockwell Group.

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A new general contractor with vast experience in sports venue construction has been named for a KeyArena renovation project now expected to exceed $800 million in cost.

Mortenson was named to the position on Tuesday, with Skanska Hunt stepping away after having been on the project since late July. Also, the Oak View Group (OVG) developer and arena project team announced that world-renowned architectural firm Rockwell Group has been contracted to design the arena’s suite and club levels — an addition expected to drive the final arena price tag up toward $825 million and possibly $850 million.

Project officials say the change will not impact the project’s completion date and that all costs are being absorbed privately by OVG and its partners as per a deal with the City of Seattle. The Seattle Times first reported on Saturday that a general contractor change could be made.

“Mortenson’s local Seattle office spent five months leading pre-construction efforts on the arena project and is very familiar with our approach and goals,’’ Ken Johnsen, senior construction executive on the project, said in a release.

In the same release, Skanska executive vice-president Kevin McCain said: “Given the market challenges and shift in timing, it did not make sense for our joint venture to move forward to the next phase of the project, so we recently came to a mutually agreed upon decision to end our joint venture’s involvement with the arena project.”

Word that Skanska Hunt — a joint venture between Swedish construction giant Skanska and the AECOM Hunt architectural and engineering firm — was pulling away from the project has been circulating since a KeyArena groundbreaking ceremony held last Wednesday.

A political source said there had been friction between the company and OVG over project pricing, timeline, scope and repeated change orders. Skanska Hunt had been asked to sign a Guaranteed Maximum Price document, according to the source, but declined to do so.

Initially estimated at just under $600 million when OVG won a request for proposals bid in June 2017, the final price tag on the arena had spiraled to $700 million by this past summer and then $800 million last week when a National Hockey League franchise was awarded this city. In announcing the franchise, the NHL said it was pushing the team’s launch date back 12 months to October 2021 so that an aggressive schedule for completing the arena could be met.

The NHL Seattle group had pushed for a start date of October 2020, but said it later became clear the new team would need to spend the first month of the 2020-21 season on the road because it was unlikely the venue would reopen before November of that year.

The renovation is to nearly double the arena’s existing footprint to 750,000 square feet and create a 17,400-seat venue for hockey and 18,600 capacity for basketball. OVG is now targeting a spring 2021 opening, in time for the start of the WNBA Seattle Storm season.

While the cost of the arena keeps mounting, much of that is due to additional features being added by OVG and NHL Seattle. The addition of Rockwell Group as interior designer brings an additional — and pricey — level of sophistication the private developer is willing to pick up the tab on in addition to other soaring costs.

“Rockwell Group is the gold standard for designers,” construction executive Johnsen said. “We are thrilled to make them a key part of our design team while they work toward a first class experience for our guests. Their engagement is a symbol of the high standards we have set to create the world’s next great arena.”

A Building Cost Index produced by Turner Construction says the price of building materials and skilled labor for nonresidential construction keeps climbing nationwide. The index says construction costs in the third quarter of 2018 are up 5.84 percent from the same period a year ago.

That would account for about a $35 million increase on a project valued at $600 million in late 2017.

U.S.-based Mortenson, which has a Kirkland office, has long been a leading global sports builder with more than 170 projects worldwide the past decade valued at $11 billion. Recent projects include NFL stadiums in Las Vegas and Minneapolis and the Chase Center arena in San Francisco.

“We’re already deep into the transition process and look forward to assisting Oak View Group with its building of a world class, landmark venue for our great city,” Mortenson senior vice-president John Nowoj said in the joint news release. “Our company holds core to our mission: a commitment to excellence in economic inclusion and supplier diversity that will ensure we maximize the local impact and value of this tremendous project.”

Geoff Baker: 206-464-8286 or gbaker@seattletimes.com; on Twitter: @GeoffBakerTimes. Geoff Baker covers the Sounders and is a sports enterprise and investigative reporter for The Seattle Times who writes a column on hockey and the NHL.